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New Buy America rules threaten Canadian exporters

A new round of U.S. protectionist hurdles could hurt Canadian exporters.

By Les WhittingtonOttawa Bureau

Wed., Sept. 14, 2011

NOTE: THIS ARTICLE HAS BEEN EDITED FROM A PREVIOUS VERSION.

MONTREAL—Canadian exporters could be hurt by another round of protectionist hurdles in the United States because of Buy America provisions in President Barack Obama’s $447 billion (U.S.) jobs bill.

Trade experts say the legislation, which proposes more than $100 billion in spending on a wide range of construction and renovation activity, contains a clause requiring contractors to use American-made iron, steel and manufactured goods in the federal government-funded projects.

“It’s always a concern” when U.S. legislation includes possible protectionist measures, said Gary Doer, the Canadian ambassador to Washington.

But he said Canadian officials have just received details of Obama’s proposed American Jobs Act and it’s too early to say for sure if the legislation, when passed, will contain Buy America clauses menacing Canada’s exports.

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“Obviously, we believe in maintaining the supply chains between our two countries and that’s the position we’ll take again in Washington if we need to,” Doer said after the wrap-up of a two-day Canada-U.S. manufacturing summit in Montreal.

Canadian exporters said they lost millions of dollars in sales south of the border two years ago because of Buy America clauses in Obama’s $787 billion bailout package, the American Recovery and Reinvestment Act of 2009. In February, Canadian officials managed to obtain a waiver for Canadian exporters from the protectionist measures in that legislation.

The possibility of another protectionist fight emerged as David Jacobson, the U.S. ambassador to Canada, confirmed that his government hopes Washington and Ottawa can roll out an action plan to overhaul joint security and customs activities at the Canada-U.S. border “in the next several weeks.”

The new arrangements are seen as a major step in bilateral relations and have been under negotiations since early this year, when Obama and Prime Minister Stephen Harper signed an initial agreement to deal with border problems, including the difficulties in getting commercial goods into the U.S. because of heightened searches and security regulations after the terrorist attacks of Sept. 11, 2001.

Jacobson said the soon-to-be-released action plan will be part of an ongoing process between Canadian and U.S. officials to improve security and trade flow between the two countries. “This is a plan, this is not like some treaty that we are going to sign (that would be) done and that’s the end of it,” he told the audience of manufacturers.

Jacobson later told reporters the next step after the plan is released will be consultations with the public on both sides of the border. He said some aspects of the Canada-U.S. border plan will only take a “matter of months” to implement but other areas of cooperation are more complicated and will take longer to put in place.

The plan will show that the two countries “have made a great deal of progress” resolving border and security issues, Jacobson said.

Negotiators are working on dozens of proposals to streamline border operations, such as joint Canada-U.S. inspection of cargo and reduced paperwork requirements for commercial shippers, as well as changes meant to enhance security such as more data-sharing on travellers and goods. Joint planning of border infrastructure is another item under negotiation.

Doer said that the bilateral talks are very close to being finalized but a few items are still under negotiation.

In his talk at the manufacturing summit, Doer stressed that Canadian officials in the U.S. are taking the gloves off to drive home to American political leaders the importance of trade with Canada, which is the biggest export market for 34 of the 50 U.S. states. It works best when Canadian companies can bluntly show American legislators how much business and how many jobs in their districts are tied to export sales in Canada.

“We’re trying to go from just relying on sending diplomatic notes with carrier pigeons down Pennsylvania Ave. to the Congress to trying to get into their districts and talk meat and potatoes about jobs and investments and the need to have a more cooperative relationship with Canada and Canadian companies,” Doer explained.

Obama’s jobs bill, announced Sept. 8, would earmark more than $100 billion on renovating schools, improving transit, fixing up abandoned homes and building public infrastructure such as roads and bridges.

Jacobson said it’s too soon to say if Canadian exporters face protectionist measures in the jobs legislation. “Depending on the exact wording of the bill, this may not even be an issue,” he told the media.

As envisaged by Obama, state and local governments would receive $50 billion for transportation projects, $35 billion for school, police and fire department payrolls, $30 billion to modernize public schools and community colleges, and $15 billion to refurbish vacant and foreclosed homes or businesses.

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